Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Afghanistan - Newly Discovered Mineralogical Treasure House (Again)

Commodities / Afghanistan Oct 14, 2011 - 11:50 AM GMT

By: OilPrice_Com

Commodities

As the U.S.-led Afghan campaign lurches into its second decade, the country's vast untapped mineralogical resources are again emerging in the Western media, seemingly underpinning the benefits of International Security Assistance Force troops "staying the course" and defeating the insurgency, after which these resources can be tapped, both providing the administration of Afghan President Hamid Karzai with a source beyond drugs for reconstruction and Western companies who develop the reserves a handsome profit.


The latest discovery is that Afghanistan is rich in rare earth elements (RREs). China currently has a near monopoly on the global production of RREs, and the price for a ton of unprocessed ore has soared to a dizzying $100,000 a ton.

So, what's wrong with this picture?

Western venture capitalists should consider the following points before whipping out their checkbooks to underwrite any mining projects.

First and most obvious, Afghanistan has been in a civil war for thirty years, with Western forces intervening only in the last decade. The country is torn by tribalism and religious divides and Karzai's administrative control is largely limited to the larger cities. Mao Tse Tung in his 1947 work "The Present Situation and Our Tasks" wrote, "Concerning attacking cities, resolutely seize all enemy fortified points and cities that are weakly defended. At opportune moments, seize all enemy fortified points and cities defended with moderate strength, provided circumstances permit. As for all strongly defended enemy fortified points and cities, wait until conditions are ripe and then take them," a strategy the Taliban are apparently following to the letter, unconcerned with election cycles and opinion polls. The Taliban know that they have time on their side - as one Taliban commander told a U.S. military officer, "you have the watches, we have the time."

Secondly, the administration of Karzai is increasingly viewed by the Afghan population as illegitimate, foisted on them by foreign forces, and extremely corrupt to boot. During the August 2009 presidential election, Karzai, in an election reported by foreign observers as riven with fraud, received less than 50 percent of the popular vote, triggering a runoff. Two months later, after Karzai agreed to a runoff election, tentatively scheduled for 7 November, but five days later his main opponent Abdullah Abdullah withdrew and Afghan officials canceled the election, leaving Karzai in power for a second term, despite the provisions of the Afghan constitution, alienating many Afghans from democratic principles.

Third, Afghanistan's rich mineral base has been known for a long time. Following disastrous December 1979 Soviet invasion, extensive Soviet exploration in Afghanistan produced detailed geological maps and reports that listed more than 1,400 mineral outcroppings, along with about 70 commercially viable deposits. The USSR subsequently committed more than $650 million for resource exploration and development in Afghanistan, which included a smelting complex for the Ainak deposit that was to have produced 1.5 million tons of copper per year. In the wake of the Soviet withdrawal a subsequent World Bank analysis projected that the Ainak copper production alone could eventually capture as much as 2 percent of the annual world market. Afghanistan's Hajigak iron deposit, in the Hindu Kush mountain range west of Kabul, is assessed as one of the largest high-grade deposits in the world.

As for the recent announcement about gigantic deposits of rare-earth metals, including lanthanum, cerium and neodymium, being discovered in Afghanistan, it is worth bearing in mind that the U.S. geologists who surveyed the sites were airlifted by Black Hawk helicopters to the Khan Neshin Village in a desert area of Helmand Province, where they worked under military protection. If such deposits are to be developed, then given the lack of security forcing geologists to be airlifted to the site, then how is the mining infrastructure to be conveyed?

Fourthly, the stupendous rise in RRE ore prices has led to a frenzied search for deposits around the world, from Estonia to Mongolia, some of which will doubtless pan out. Given Afghanistan's instability, why would an investor risk his capital there, especially when neighboring Central Asian nations like Mongolia represent a far more stable and investor-friendly environment? Mongolia recently signed off on a massive $7 billion mining project, allowing Rio Tinto and Ivanhoe Mines a majority 67 percent share.

While Afghanistan's mineralogical potential is vast, the country's crippling economic and insurgency problems remain, and it's worth nothing here that despite the 2010 joint report by the Pentagon, the U.S. Geological Survey and U.S. Agency for International Development that Afghanistan possesses "previously unknown" and untapped mineral reserves worth up to $1 trillion, two-thirds of Afghanistan's population live on less than $2 a day.

So, even though Afghan Ministry of Mines adviser Jalil Jumriany said of the RRE discoveries, "This will become the backbone of the Afghan economy," the question, not only for foreign investors but the Afghans themselves remains, "qui bono?"

There are no clear answers emerging to this question from Kabul anytime soon.

Source: http://oilprice.com/Metals/Commodities/Afghanistan-Newly-Discovered-Mineralogical-Treasure-House-Again.html

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2011 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in